Love High-Growth? Here Are 3 Stocks to Consider

By Timothy Green, Keith Speights, and Jordan Wathen Markets Fool.com

Companies growing at a breakneck pace often don't come cheap, but investors who hold on for years as that growth plays out can be rewarded handsomely if things go right. If you're on the prowl for some high-growth stocks for your portfolio, take a look at MercadoLibre (NASDAQ: MELI), Vertex Pharmaceuticals (NASDAQ: VRTX), and Investors Bancorp (NASDAQ: ISBC). You won't be disappointed.

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The other fast-growing online retailer

Tim Green (MercadoLibre): If you feel like you missed the Amazon train but still want to invest in e-commerce, MercadoLibre may be a good bet. The company offers an online commerce platform in Latin America, enabling others to sell merchandise much like Amazon's third-party marketplace business. This frees the company from having capital tied up in inventory, at the expense of capturing only a fraction of the total sales volume.

Image source: MercadoLibre.

181.2 million items were sold on MercadoLibre's platform in 2016, up 41%. Gross merchandise value was $8 billion, and the company recorded $844 million of revenue. MercadoLibre is solidly profitable thanks to its business model, enjoying an operating margin of 21.4% in 2016. This performance is despite some countries in Latin America, like Brazil and Venezuela, suffering from major economic crises.

MercadoLibre is not a cheap stock, with the company valued at $12.5 billion. That's nearly 15 times 2016 sales and 92 times earnings, although both sales and earnings are growing quickly. Investors are betting that MercadoLibre will grow to dominate e-commerce in Latin America, and they're willing to pay a hefty premium to make that bet. MercadoLibre's growth has certainly been impressive so far, and the stock could make for a great long-term investment if the company can keep it up.

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Leading the way in treating cystic fibrosis

Keith Speights(Vertex Pharmaceuticals): Vertex Pharmaceuticalsmore than quadrupled its earnings in the first quarter of 2017 compared to the prior-year period. The biotech probably won't be able to sustain that tremendous growth, but it also probably won't disappoint investors with its earnings growth for quite a while to come. Wall Street analysts project Vertex will increase earnings by an average annual rate of nearly 65% over the next five years.

Vertex is leading the way in the development of drugs to treat cystic fibrosis (CF), a genetic disease that primarily affects the lungs. The company's first product, Kalydeco, was approved by the U.S. Food and Drug Administration (FDA) in 2012.However, Vertex's top drug now is Orkambi. The company won FDA approval for the CF drug in 2015.

Orkambi should be the primary driver of earnings growth for the immediate future. Vertex is working with European countries to finalize reimbursement agreements. As those agreements become effective, new markets will open up.

The company's pipeline is where the real potential is, though. In March, Vertex announced great resultsfrom two late-stage studies evaluating a combination of experimental drugtezecaftor (VX-661) and Kalydeco in treating CF patients. The company plans to submit the combo for regulatory approval in the U.S. and in Europe by the third quarter of 2017.Vertex is also studying triple-combination regimens with tezecaftor and Kalydeco.

A bank primed for growth

Jordan Wathen(Investors Bancorp): Fast-growing banks are few and far between, but a recent pitch at the Ira Sohn conference put this high-growth bank on my radar.

Investors Bancorp has grown loans and deposits at a rate of 13% per year over the last three years thanks to acquisitions and organic growth. The bank still has plenty of room to grow, as it is less than halfway to $50 billion in assets, the point at which it would become a so-called "SIFI bank" and be subject to greater regulation.

Growth isn't limited by the balance sheet. The bank is levered at only 7.5 times its equity, whereas many banks of similar size are levered 10 times or more. This gives it ample capital to support more loans and deposits before stretching the limits of its equity cushion. Excess capital also enables the bank to support a robust share repurchase program.

While fast growth is generally a cause for concern in the banking industry -- banks that grow quickly frequently do so by loosening underwriting criteria -- it's comforting that its loan book is very "plain vanilla."Residential and multifamily real estate loans make up about 65% of its loan portfolio. Riskier construction and development loans and home equity loans make up only about 4% of total loans.

Trading at just 1.3 times tangible book value, Investors Bancorp could be an attractive acquisition candidate for regional banks that could use its overcapitalized balance sheet to support their own loan and deposit growth. Until then, Investors Bancorp shareholders should be satisfied with a long runway for double-digit growth in earnings.

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Jordan Wathen has no position in any stocks mentioned. Keith Speights has no position in any stocks mentioned. Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon and MercadoLibre. The Motley Fool recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.